Money and Finance
- Howard Marks On The Balance Between Offense And Defense
From The Most Important Thing: A conscious balance must be struck between striving for return and limiting risk— between offense and defense. In fixed income, where I got my start as a portfolio manager, returns are limited and the manager’s greatest...
- Seth Klarman: Adopt An Absolute-performance Orientation
From Margin of Safety:Most institutional and many individual investors have adopted a relative-performance orientation...They invest with the goal of outperforming either the market, other investors, or both and are apparently indifferent as to whether...
- Bill Gross – April 2012 Investment Outlook: The Great Escape: Delivering In A Delevering World
When interest rates cannot be dramatically lowered further or risk spreads significantly compressed, the momentum begins to shift, not necessarily suddenly, but gradually – yields moving mildly higher and spreads stabilizing or moving slightly wider....
- The Absolute Return Letter - December 2010: The Dirty Dozen
In the world of finance, risk is essentially the probability of an investment’s actual return being different from the expected return. As most of us are not overly concerned about actual returns being higher than expected, it is fair to say that in...
- Harvard Business School Interview With Seth Klarman
When you started with Baupost at age 25, did you already consider yourself a value investor? Yes. After my junior year in college and right after graduating, I worked for Mutual Shares Corporation, which was run by a wonderful gentleman named Max Heine....
Money and Finance
Target risk, not return
From Seth Klarman, via Margin of Safety:
Targeting investment returns leads investors to focus on upside potential rather than on downside risk....Rather than targeting a desired rate of return, even an eminently reasonable one, investors should target risk. Treasury bills are the closest thing to a risk-less investment; hence the interest rate on Treasury bills is considered the risk-free rate. Since investors always have the option of holding all of their money in T-bills, investments that involve risk should only be made if they hold the promise of considerably higher returns than those available without risk. This does not express an investment preference for T-bills; to the contrary, you would rather be fully invested in superior alternatives. But alternatives with some risk attached are superior only if the return more than fully compensates for the risk.
- Howard Marks On The Balance Between Offense And Defense
From The Most Important Thing: A conscious balance must be struck between striving for return and limiting risk— between offense and defense. In fixed income, where I got my start as a portfolio manager, returns are limited and the manager’s greatest...
- Seth Klarman: Adopt An Absolute-performance Orientation
From Margin of Safety:Most institutional and many individual investors have adopted a relative-performance orientation...They invest with the goal of outperforming either the market, other investors, or both and are apparently indifferent as to whether...
- Bill Gross – April 2012 Investment Outlook: The Great Escape: Delivering In A Delevering World
When interest rates cannot be dramatically lowered further or risk spreads significantly compressed, the momentum begins to shift, not necessarily suddenly, but gradually – yields moving mildly higher and spreads stabilizing or moving slightly wider....
- The Absolute Return Letter - December 2010: The Dirty Dozen
In the world of finance, risk is essentially the probability of an investment’s actual return being different from the expected return. As most of us are not overly concerned about actual returns being higher than expected, it is fair to say that in...
- Harvard Business School Interview With Seth Klarman
When you started with Baupost at age 25, did you already consider yourself a value investor? Yes. After my junior year in college and right after graduating, I worked for Mutual Shares Corporation, which was run by a wonderful gentleman named Max Heine....